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RESULTS
D.
T KEARNEY (PTY)
© _ATI(EARNEY 2001 k~3!&'?~~~;:;t;~d:t{;' '0A'v,';;hBit"<;P~1&!k&;iiliUlli*,?44,;.-~1';Te:',",}e;'f',-t~'4 ... ;(:~W*·;:'f¥,'t1f~~'''?H$~%t\';:(;;;'tt(,,%if.f'''~\,32:,{{J0r;"Sf>"h0\e0&~{~\1,t':i''?fkf;'/~'.t;'f.·~{:;c't'~?'::-h,.::""$:>;-i,.,,yL>t~ {~iy;:)<l!<~'<: ,;,,,<; to'· '.'j'\'fi9;;:d;t~&'\~:i\\:"·,,~ ,., '~':1-{;~''':. '% ;W'\l"J\ 's::;~
This document is exclusively intended for the selected recipients.
Distribution, quotations and duplications
- even in the form of extracts - for third parties is only permitted
upon prior written consent of A. T. Kearney.
A. T. Kearney used the text and graphs compiled in this report in a pmsentation; they do not represent
a compil9te documentation of the presentation.
~'~'17(EARNEY
A.T. Keamey 83/SAIMMfMal'ch 2001 2
©.ATKEARNEY 2001
SA comnanies ave recognised are expecting significant usiness enefits
ofe-p these" ..
-Anglo American
--McCarthy Motor Holdings
-Barloworld -Engen - Iscor -Old Mutual @Nedcor • Didata -Multichoice -Naspers @M-Web
@Sasol
@Bidvest
- Standard Bank
Source: Press, websites
Quadrem
Procure Trade
Miraculum
CommerceZone
Marketsite Africa "
MyMarket.com
The Trade standard
"Gartner Group estimates that by automating
purchasing transactions and processing with
Web-Based electronic procurement solution,
companies can reduce purchasing costs by
up to 30%" - Intelysis
A.T. Kearney 83/SAIMMI March 2001 3
©A'f](EARNEY 2001
e ossible en,efits are hasis is eing placed on the "e"
"procurement"
"e" El) Allow on-line access to
company wide supply contracts El) Speed the procurement process
by automating purchasing functions
El) Move towards paperless transactions
El) Capture spend data for use in future contract negotiations
e-procurement scale
materialise, ecause enough
.. Aggregate company spend El) Standardise what is bought El) Negotiate better deals with
suppliers .. Demand management .. Procurement organisation and
policies El) Reengineer existing
A.T. Kearney 83/SAIMMlMarch 2001 4
© .?J7(EARNEY 2001
Procurement practices ar1e the focus seek leverage e-procurement
leading global co
• They adopt a rigorous approach to align their business and supplier requirements
• Consequently they achieve substantive savings
" anles
III e-Procurement provides added cOlIlpliance to ensure the benefits and additional procurement . process savIngs
Leveraging e-procurement in a net market provides further benefit
Jointly this provides a solid business case
Case study - A leading clothing and consumable retailer
A.T. Keamcy 83/SAIMM! March 200} 5
© Af'I(EARNEY 2001
They adopt a rigorous requirements
Value Chain
Vallle Added
External Pllrchases
o
o
Procurement Portfolio Positioning
QOffice Supptieso
00
o circuits
o 0
Supply Market Complexity
I
Position the Sourcing Group
+
ach to align their
Strategic Sourcing Approaches Selection
Select "Best Fit" Sourcing
Approaches and Techniques
G LOW
1 Sourcing Group: Groups of external spend with similar characteristics and suppliers
lIi
• USlneSS
Wave prioritization and implementation
HIGH
III
Define, prioritize and implement opportunities
A.T. Kearney 83/SAIMMI March 2001 6
©AJ7(EARNEY 2001
Consequently ey achieve substantive savings
Fred Smith, CEO, Federal Express: "A.T. Kearney has helped enormously to address our key issues '" We have planned and implemented cost reduction programs that will return over a $ 112 billion. If
Art M2lrtinez, CEO, Sears (excerpt, Dangerous Company, 1997): HIn sharpest contrast '" A.T. Kearney consultants helped engineer one of the most stunning corporate turnarounds in recent memory."
Micha~:1 F. Mee, CFO, Bristol-Myers Squibb: "We have monumental goals of productivity improvement, purchasing is delivering now."
R. Tobiias, CEO, EH LiUy: "With A.T. Kearney's help, we have achieved nearly double our cost reduction targets."
Jack Smith,CEO, GM: "A.T. Kearney are our achievement consultants." "A.T. Keamey is really the father of our Global Purchasing Systems. It is not Ignacio Lopez; it is A.T. Kearney."
A.T. Kearney 83/SAIMMI March 2001 7
© AJ'I(EARNEY 2001
e-Procurement provides added compliance to ensure the enefits additional procurement process savings
Costs per Transaction
Source: A.T. Kearney client engagements
Price
Twenty Days
Time
Five Days
.. 0001'
Compliance ! ............................................................................................. :
A.T. Keamey 83/SAIMMI March 2001 8
@ .. AJ7(EARNEY2001
Leveraging e-procuremeIlt 4! a et market provides
5% -15%
Sourcing Group General, Facility & MRO
5% - 15% I Products Facility Services Rock Support and Timber Maintenance Spare parts
5% - 15% I Explosives Chemicals
Source: AT Keamey experience
Safety equipment IT Hardware and Software Travel Services
Co. A I Co. B I Co. C Spelld Spend Spend
A.T. Kearney 83/SAIMMI March 2001 9
©.<4.T/(EARNEY 2001
this provides a solid business case
., Interview schedules
.. Spend data collection and analysis " IT requirement assessment .. Process assessment .. Develop and select options .. Communication roll-out
r----------------------------------------------, I
It Leading practices in procurement e Significant savings potential .. Soureed spend for e-procurement
" E-enable procurement practices " Transaction cost, compliance, speed and
ease of use benefits
sourcing and e-procurement benefits generation opportunities
service opportunities
1 ______ ---------------------------------------_.
It Strategic Sourcing and e-procurement business case
It Net marketplace business case
• Revenue enhancing and shared services opportunities
A.T. Kearney 83/SAIMMI March 2001 10
©.AfI(EARNEY 2001
Case - A leading clothing and con sum retailer
III AT Keamey was engaged by the client to develop
and implement an e-procurement strategy
III With a sourceable spend base of ruo billion,
they recognised the importance of e-procurement,
and how it could assist them in achieving
significant cost savings and business benefits
III Conducted an opportunity assessment to identify sourceable spend, sourcing groups and compare their procurement practices with industry best practices
III Developed an e-procurement strategy and business case focusing on "Strategic Sourcing, then e-enabling and [mally leveraging volume in a Net Marketplace" value proposition
III Implemented the strategy through a joint project team of e-procurement, strategy and technology experts to ensure success
A.T. Kearney 83/SAIMMJ March 2001 11